If you are eager to buy your home but are waiting for prices to decrease even more, you might take too long and give up a lot of advantages. The federal government is planning on stricter lending guidelines in four different areas:
- The type of mortgage;
- The minimum down payment;
- The debt ratios of the buyer;
- The FICO score of the purchaser;
The 30 year fix rate mortgages have been scrutinized for some time now. It appears that some in government want to take over the idea of mortgage process of other countries. The Canadian mortgages stretches over 25 years with an interest rate to renegotiate every five years. You will pay less if the interest rates are low and more if the interest rates are high. The fix rate is two percent higher than the going rate at the time of your closing.
Would the same happen in this country? Last week, Housing Wire quoted Janis Bowdler, senior policy analyst at the National Council of La Raza: “Without some form of Fannie Mae and Freddie Mac, replacements to support these popular loans, many first time borrowers will be shut out”. He also said: “Without that guarantee lenders would not offer 30-year fixed-rate mortgages, at least not at rates the average person could afford. Yes, some would be available but not for the average family but for those with a large amount of inherited wealth they can put to a large down payment.”
In order to have sufficient money for living expenses, it is good to have a mortgage at the lowest interest rate and for the longest time possible. The mortgage rates will increase from historic lows, the 30 year fixed rate may disappear and the rents will return to historic norms of 3% annual increases.Now is a good time not to wait, but to take action.
I recommend to my clients that they get the best rate that they can afford. Keeping a loan longer to make a lower payment isn’t always a good idea because it ends up costing more even at the lower rate.